Jan. 31 (Bloomberg) -- Facebook Inc. is expanding its Places Deals service to five European countries, offering users of the biggest social-media website discounts when they are near food shops and other retailers.

Initial partners in Europe include coffee chain Starbucks Corp. and Telefonica SA’s mobile-phone operator O2, Facebook’s European Vice President Joanna Shields said in London today.

The service, which started in the U.S. last year, targets clients based on location. Users need to share their whereabouts through mobile phones to participate. The service will start in Germany, the U.K., France, Spain and Italy today.

About 200 million of Facebook’s more than 500 million members use the service on a handheld device, increasing the demand for mobile features. With the Deals tool, Palo Alto, California-based Facebook is trying make money from retailers eager to reach social-networking users when they’re most likely to make a purchase.

Facebook said last year it won’t generate revenue directly from the Deals promotions. Even so, advertisers may choose to buy ads on Facebook’s site to inform consumers about the deals, spurring revenue for the company.

Emily White, the Facebook executive responsible for the new service, said today that Places Deals is ‘very different” from Chicago-based Groupon Inc., the website that sells users discount vouchers for goods and services and last year rejected a $6 billion takeover offer from Google Inc.

The tool is about offering deals based on where people are in a given moment, White said.

--Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net